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HSBC defends itself after months of jabs from Jason Kenney over its oilsands lending policy

Geoffrey Morgan

Published: April 29, 2019 - 4:08 PM

CALGARY — HSBC Holdings Plc says it remains committed to Alberta, even if the province’s incoming premier Jason Kenney has launched a scathing attack on the bank and pledged that his government won’t conduct business with it until Europe’s largest bank changes its energy lending policies.

Several Canadian oilsands companies reacted angrily when HSBC, and by extension its Canadian unit HSBC Bank Canada, outlined a new policy to stop offering financial services to new oilsands projects or new pipelines connected to the oilsands.

Lately, the bank has faced sharp criticism from premier-designate Kenney, who called it hypocritical for its willingness to do business with Saudi Arabia, a major oil producer with a horrific track record on human rights.

“I want to be absolutely clear — we have not and are not ‘boycotting’ anyone. HSBC is a long-time supporter of Alberta and the energy sector. That has not changed,” said Sharon Wilks, HSBC Bank Canada’s spokesperson.

Wilks would not say how HSBC intended to approach or work with the province’s new government but re-iterated that the bank has been in Alberta for 30 years and wouldn’t leave.

She said the bank operates in 17 locations in Alberta, employs 330 people here and last year paid $8.9 million in corporate taxes in the province. It has lent $14.4 billion to 1,462 businesses across the province, including the energy sector.

“Every time the industry has faced a downturn, we showed our personal commitment to help our customers weather the storm — and we are still here, continuing to do that,” Wilks said. She added that HSBC is a “leading bank for oilfield services companies” and would continue to invest in the province.

HSBC is a long-time supporter of Alberta and the energy sector. That has not changed,

Sharon Wilks, HSBC Bank Canada’s spokesperson

A senior banking executive in Calgary, who spoke on condition of anonymity due to his banking relationship with HSBC, said the bank’s exposure to the upstream oil and gas sector in the province is limited but it is “a meaningful lender” to oilfield services and energy-related manufacturing businesses.

Another senior banking executive, who previously worked for HSBC in Alberta, said the local employees at the bank “cringed” when Kenney criticized HSBC during his victory speech and find themselves in a difficult position as they try to maintain client relationships here despite an unpopular policy imposed by HSBC’s head office.

They noted that HSBC has previously had a stronger relationship with the domestic energy sector, especially when former Encana Corp. CEO Gwyn Morgan was HSBC Canada’s lead director.

HSBC also has a large business in Alberta’s real estate sector and with businesses outside of the energy sector, both bankers said.

Still, the energy lending policy was not a popular one in the province’s oil and gas industry, the province’s dominant sector.

HSBC has faced sharp criticism from premier-designate Jason Kenney.

Canada’s largest oil company Suncor Energy Inc. said last August it would “completely sever” its relationship with HSBC after the bank finalized its lending policy and would not work with the bank at its non-oilsands assets at offshore operations in Eastern Canada, the U.K. and Norway.

“We have had extensive discussions with John Flint, their CEO, and the HSBC team. Regrettably, they continue to target based on reservoir, rather than on leadership or on performance based criteria,” Suncor spokesperson Nicole Fisher said at the time.

HSBC is not the only bank that has stopped funding new oilsands projects. A number of French financial services groups including BNP Paribas S.A., Societe Generale S.A., Natixis, and Credit Agricole Group pledged to stop financing oilsands developments in recent years.

Other international banks have also struggled to be profitable in the energy patch since a protracted downturn that was triggered by a collapse in prices in 2014. On Monday, Australia’s Macquarie Group Ltd. said it was pulling its equities research, sales and syndication business out of Canada, and cutting staff in Calgary and Toronto.

Data from the Fossil Fuel Finance Report Card 2019, which is compiled by green activist organizations including Oil Change International, show that HSBC’s financing activity in the oilsands sector declined 87 per cent last year. Another U.K.-based bank, Barclays Capital Inc., also saw financing levels drop by 94 per cent.

The report card stated that Canada’s five big banks and JP Morgan Chase represent the largest lenders to the oilsands sector.